NEW YORK, Jan 7 (Reuters) - U.S. stocks lost ground on
Monday, as investors drew back from recent gains that lifted the
S&P 500 to a five-year high, in anticipation of sluggish growth
in corporate profits.

Shares of financial companies dipped after a group of major
U.S. banks agreed to pay a total of $8.5 billion to end a
government inquiry into faulty mortgage foreclosures. The KBW
bank index, a gauge of U.S. bank stocks, was down 0.3
percent.

Other sectors were hit as well, most notably energy and
utilities. The S&P 500 energy sector index fell 0.8
percent and the utilities sector was off 1.1 percent.

The day's decline came a session after the S&P 500 finished
at a five-year high, boosted by a budget deal and strong
economic data. The S&P 500 rose 4.6 percent last week, the best
weekly gain in more than a year.

"It's a little bit of taking some risk off the table ahead
of profit season, you're not going to see anything all that
great" on earnings, said Larry Peruzzi, senior equity trader at
Cabrera Capital Markets Inc in Boston.

Earnings are expected to be only slightly better than the
third-quarter's lackluster results, and analysts' current
estimates are down sharply from where they were in October.
Fourth-quarter earnings growth is expected to come in at 2.8
percent, according to Thomson Reuters data.

Aluminum company Alcoa Inc begins the reporting
season by announcing its results after Tuesday's market close.
Alcoa shares fell 1.7 percent at $9.10.

Ten mortgage servicers - including Bank of America,
Citigroup, JPMorgan, and Wells Fargo -
agreed on Monday to pay $8.5 billion to end a case-by-case
review of foreclosures required by U.S. regulators.

In a separate case, Bank of America also announced roughly
$11.6 billion of settlements with mortgage finance company
Fannie Mae and a $1.8 billion sale of collection rights on home
loans.

The bank also entered into agreements with Nationstar
Mortgage Holdings and Walter Investment Management
to sell about $306 billion of residential mortgage
servicing rights.

"The financials probably have the wind behind them now with
a lot of the regulations coming out ... the market has to absorb
a lot of the gains, and for that reason there's a pullback from
this level," said Warren West, principal at Greentree Brokerage
Services in Philadelphia.

Shares of U.S. jet maker Boeing Co dropped 2 percent
after a Boeing 787 Dreamliner aircraft with no passengers on
board caught fire at Boston's Logan International Airport on
Monday morning.

Amazon.com shares hit their highest price ever at
$269.22 after Morgan Stanley raised is rating on the stock.
Shares were up 3.6 percent at $268.46.

Video-streaming service Netflix Inc shares gained
3.4 percent to $99.20 after it said it will carry previous
seasons of some popular shows produced by Time Warner's
Warner Bros Television.

Walt Disney Co stock fell 2.3 percent to $50.97. The
company started an internal cost-cutting review several weeks
ago that may include layoffs at its studio and other units,
three people with knowledge of the effort told Reuters.

Volume was lower than average, as 4.78 billion shares were
traded on the New York Stock Exchange, NYSE MKT and Nasdaq. This
is well below the 2012 average of 6.42 billion per session.

Declining stocks outnumbered advancing ones on the NYSE by
1,629 to 1,363, while on the Nasdaq decliners beat advancers
1,438 to 1,066.